G.R. No. 187425 ; March 28, 2011
COMMISSIONER OF CUSTOMS, Petitioner, vs. AGFHA INCORPORATED, Respondent.

FACTS

On December 12, 1993, a shipment of bales of textile grey cloth arrived at the Manila International Container Port (MICP). The Commissioner of Customs held the shipment, alleging its owner/consignee was fictitious. Respondent AGFHA Incorporated intervened, claiming ownership. After seizure and forfeiture proceedings, the District Collector of Customs ordered the shipment forfeited in favor of the government on September 5, 1994. AGFHA’s appeal was dismissed by the Commissioner on August 25, 1995. The Court of Tax Appeals (CTA) Second Division, on November 4, 1996, reversed the Commissioner and ordered the immediate release of the shipment to AGFHA. This decision became final and executory on November 27, 1996. The Commissioner’s subsequent appeals to the Court of Appeals and the Supreme Court ( G.R. No. 139050 ) were dismissed, with the Supreme Court’s decision becoming final on February 5, 2002. A writ of execution was issued on October 16, 2002, but was returned unsatisfied. In proceedings to enforce the writ, it was revealed that the Bureau of Customs could not determine the status or whereabouts of the shipment. The CTA Second Division, in a Resolution dated May 17, 2005, adjudged the Bureau of Customs liable to AGFHA for the value of the lost shipment, US$160,348.08, with interest. This was modified by an October 18, 2005 Resolution, which made the liability subject to the payment of prescribed taxes and duties at the time of importation. The CTA En Banc affirmed this decision on February 25, 2009. The Commissioner filed the present petition.

ISSUE

Whether the Commissioner of Customs is liable to pay AGFHA the value of the seized and lost shipment.

RULING

Yes. The Supreme Court affirmed the decision of the CTA En Banc. The Court held that the government, through the Bureau of Customs, is liable for the value of the lost shipment. The liability arises from the final and executory judgment ordering the release of the goods, which the Bureau failed to comply with due to the loss of the goods while in its custody. The Court rejected the Commissioner’s argument that the claim must be filed with the Commission on Audit under P.D. No. 1445, ruling that the liability was a direct result of the Bureau’s failure to obey a final court order, not a simple money claim. The Court also upheld the CTA’s computation of the shipment’s value based on the invoice presented by AGFHA and the imposition of legal interest. The liability is to be paid from the sale of goods or properties seized or forfeited by the Bureau in other cases, after payment of the applicable customs duties and taxes.